Audit Notes: William Cohan, Three Little Pigs, Recovery Spring

In Bloomberg BusinessWeek, William D. Cohan writes about the spectacular downfall of hedge fund manager Dan Zwirn, whose $12 billion empire crumbled after he decided to buy a private jet and his CFO paid for it with improperly, and apparently, unbeknownst to Zwirn.

This is fun (emphasis mine):

Although the SEC has not accused Gruss of pocketing any D.B. Zwirn funds, it notes that the transfers were “improper,” were not permitted by the Zwirn offering documents, were not disclosed to investors until after Gruss resigned in September 2006, and were violations of the Investment Advisers Act. Unless Gruss “is permanently restrained and enjoined,” the SEC wrote in its complaint, “he will continue to engage in acts, practices and courses of business of similar type and object.” All of which might be news to Gruss’s current employer, the U.S. subsidiary of Babcock & Brown. After making and breaking six appointments to give his account of what happened at D.B. Zwirn, Gruss decided not to comment for this story. Babcock & Brown did not return requests for comment.

Wu resigned in June 2005 “because she was uncomfortable with the interfund transfer practice,” according to court documents. Zwirn says Gruss told him she left because she wanted to have a baby. According to the SEC, Wu’s replacement, Li Anne Law, “repeatedly expressed concern to Gruss about the practice of transferring cash between funds.” On April 18, 2005, after Gruss had approved another transfer, Law wrote him an e-mail. “Is there a game plan? Or is this something that the back office must ‘learn to accept?’ ” Gruss’s e-mail response: “What’s our altwrnatives? [sic]” Law quit the company in June 2006 “for the same reason” as Wu, according to court documents, and told her successor “not to allow herself to get drawn into the practice of making interfund transfers.” Law has moved to London and changed her name. Wu now lives in Asia. Neither could be reached for comment.

— The Guardian’s new ad is awesome. Watch it:

It’s a far cry from, say, this awful campaign, which just makes you feel bad about being the kind of dipstick that subscribes to The New York Times:

— If Europe doesn’t fall off a cliff and if China’s bubble doesn’t collapse and if Israel doesn’t bomb Iran, we might just have a real economic recovery on our hands here in the U.S.

Those are very big ifs, to be sure, but we’ll take what we can get. Auto sales soared in February to the highest level in more than four years—before the recession started. The Wall Street Journal writes that “After more than two years of frustrating fits and starts, the U.S. economy is showing signs of moving onto firmer ground.”

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